The federal government has signed agreements with 16 pension fund managers to operationalize its Defined Contribution Pension Fund Scheme, a cornerstone of reforms designed to rein in public-sector pension costs that are projected to swell to Rs1.17 trillion by fiscal year 2026-27.
The Ministry of Finance said the agreements authorize the selected managers — a mix of the country’s largest banks, asset management companies, and insurers — to establish and run both conventional and Shariah-compliant pension funds for eligible federal government employees.
The approved roster includes ABL Asset Management, Al Habib Asset Management, Al Meezan Investment, Faysal Asset Management, JS Investments, MCB Investment, Bank Alfalah Asset Management, HBL Asset Management, UBL Fund Managers, NBP Fund Management, EFU Life Assurance, Pak-Qatar Family Takaful, Atlas Asset Management, Lucky Investments, National Investment Trust, and AWT Investments.
Under the framework, fund managers are also required to arrange mandatory insurance coverage for employees against death and disability. The government plans to set up a dedicated Non-Banking Finance Company to oversee the scheme’s implementation and monitoring. Until that entity is operational, the finance ministry will handle those functions and develop an online portal for pension account management.
The scheme restricts withdrawals before retirement. Upon retiring, employees may withdraw up to 25% of their accumulated balance as a lump sum, while the remainder must stay invested under the Voluntary Pension System Rules, 2005, for at least 20 years or until death — whichever comes first.
Pakistan introduced the contributory pension system in 2024 for new federal civilian employees hired on or after July 1 of that year, replacing the traditional unfunded pension model. Rollout for armed forces personnel, originally slated for July 1, 2025, has been delayed.
Under the current structure, employees contribute 10% of their pensionable pay and the government contributes 12% — a reduction from an earlier proposal of a 20% government share.
The reforms target Pakistan’s ballooning pension bill, which is forecast to hit Rs1.17 trillion in FY2026-27, with military pensions accounting for roughly Rs860 billion and civilian pensions about Rs300 billion.
